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TMI Blog2024 (12) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals together for adjudication by passing this consolidated order. 3. Brief facts of the case are that assessee had made investments in the year 2018 in offshore fund ASK Global Strategies Fund MAURITIUS (129.502355 units of ASK Global Strategies Fund through Apex Fund Services). On verification of ITRs filed, it was found that assessee had not disclosed his foreign investment in schedule FA of ITR for AY 2020-21 and AY 2021-22. Assessee was a resident in India from AY 2008-09 to AY 2022-23. 3.1. According to the Ld. Assessing Officer, schedule FA was introduced in the return of income from Assessment Year 2012 - 13 by the Finance Act, 2012, making it mandatory for the Indian residents to report about their foreign assets and income generated thereupon in foreign jurisdiction in order to track the same. According to the Ld. Assessing Officer, failure on the part of the assessee to make the said reporting attracted penalty of Rs. 10 lakhs under section 43 of the Act. Ld. Assessing Officer had issued a show cause notice seeking explanation from the assessee to this effect which was replied upon. 3.2. Assessee submitted that the said investment was made by assessee on 14th Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribe its objectives. The same are extracted below for ease of reference: i. The preamble of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA), describes the objective of the Act to be make provisions to deal with the problem of the Black money that is undisclosed foreign income and assets, the procedure for dealing with such income and assets and to provide for imposition of tax on any undisclosed foreign income and asset held outside India and for matters connected therewith or incidental thereto." ii. Section 2(2) of the BMA, defines an assessee as "(2) "assessee" means a person, being a resident other than not ordinarily resident in India within the meaning of claute (6) of section 6 of the Income tax Adler-wlwm tus in respect of undisclosed foreign income and assets, or any other payable under this Act and includes every person who is deemed to be an assessee in default under this Act" iii. Section 2(11) of the BMA, defines an undisclosed asset located outside India as "(71) "undisclosed asset located outside India" means an asset (including financial interest ell any exp located outside India, held by the assessee in his name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year." 3.8. Assessee placed reliance on the decision of the Hon'ble Apex Court in the case of Hindustan Steel Ltd. vs State of Orissa (1972) 83 ITR 26(SC) which held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Revenue Department that the foreign asset/ESOP remained undisclosed entirely and there was malafide intention or ulterior motive for hiding the foreign assets from disclosing; and as the Hon'ble Apex Court in the case of Hindustan Steel Ltd. has laid down the dictum that simply on the technical or venial breach of the law the penalty is not automatically leviable; the judgment of the Hon'ble Co-ordinate Bench of the Tribunal in the case referred to above, wherein the Co-ordinate Bench dealt with the identical situation and ultimately deleted the penalty; hence we are inclined to delete the penalty under consideration. Thus, the same is deleted." 4. Before us, ld. Counsel for the assessee has placed reliance on long line of judicial precedents by the various coordinate benches, especially that of ITAT Mumbai, on the issue being dealt here in these appeals to assert the contentions of the assessee and bring clarity on the subject matter by pointing out change in stand taken on different occasions by the same author / co-author. The same are listed as under in the chronology of their date of pronouncement. Sr. No. Name of the parties BMA Number Date of pronouncem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule FA. At the same time, husband of the assessee had declared the said investment in Schedule FA in his return of income. His case was taken up for scrutiny assessment and was completed accepting the returned income. Reliance was placed on the decision of Coordinate Bench of ITAT, Mumbai in Leena Gandhi Tiwari (supra). On these set of facts, it was observed that section 43 uses the words "the Assessing Officer may direct" which would mean that power of Assessing Officer to impose penalty is discretionary and not mandatory. Non-disclosure in assessee's return was considered as bonafide mistake since required disclosure was made in the return of income of husband of the assessee. There was no intention to evade tax on this account. Reliance was also placed on the decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. (Supra). On the use of word "may" in section 43 for levy of penalty, it was observed that it is necessary to find out from the scheme of the Act, the intention of the legislature for which reference was made to the speech of the then Hon'ble Finance Minister given while introducing the Act. Thus, after considering all these facts and law, it was conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. According to the assessee, source of the foreign investments stood explained and income arising therefrom was offered to tax. Assessee submitted that in the return filed for Assessment Year 2019-20, foreign assets were duly disclosed. Owing to inadvertent mistake, assessee referred to discretionary power u/s 43 of the Act in the context of the words "may levy penalty" and relied on the decision of Leena Gandhi Tiwari (supra). It was observed that since foreign asset has not been disclosed in the return of income in Schedule FA, the Assessing Officer exercised his discretion judiciously. It was concluded that provisions of section 43 does not provide any room not to levy penalty even if the foreign asset is disclosed in books since penalty is levied only towards non-disclosure of foreign assets in Schedule FA. Penalty was thus confirmed and appeal of the assessee was dismissed. v) CIT vs. Shrem Alloys Pvt. Ltd., in BMA Nos. 08 to 11/Mum/2023, dated 29.08.2023 e. In this case, assessee declared its foreign asset in the return filed u/s. 153A of the IT Act. However, due to oversight requisite details were not filed in Schedule FA in the return filed u/s. 139(1) of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viii) Addl. CIT vs. Manoj Mahendrakumar Pandya in BMA No.6/Mum/2024, dated 26.06.2024 h. In this case, investment made in foreign asset was not disclosed in Schedule FA of the return of income for Assessment Year 2016-17 but was made in earlier and subsequent years. Assessee claimed bonafide inadvertent clerical mistake about non-reporting only in Assessment Year 2016-17 and relied on the decision of Leena Gandhi Tiwari (supra). He also placed reliance on the decision of Shrem Alloys [supra- Sr. No.v) above]. By following the judicial precedents, it was held to be not a fit case for penalty and appeal of the Revenue was dismissed. ix) Rohit Krishna vs. CIT (supra - assessee's own case) i. This has already been discussed in the above paragraph no.3.9, wherein decisions of Ocean Diving Centre (supra - Sr. No.vi above) and Hindustan Steel Ltd. (supra) were relied upon, giving relief to the assessee. 6. Ld. Counsel for the assessee strongly submitted that existence of discretionary power u/s. 43 of the Act by the use of the words 'may levy penalty' is well founded. Intention behind introduction of the Act is mainly to track and bring into tax net the un-disclosed black money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign assets/income in Schedule FA of the Income tax return is for and monitoring the investments held abroad by the residents of India. Preamble to the Act describes its objective to deal with problem of black money, i.e., undisclosed foreign income and assets. The said Act must not be invoked for punishing a technical /venial /bonafide breach of any statutory obligation and therefore bonafide actions of the tax payers must be excluded from the application of provisions of this stringent legislation. In this regard, we draw our force from the decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. (supra). 9. Accordingly, considering the facts and circumstances of the case as discussed above, admittedly it is not a case where foreign asset remained undisclosed in entirety and that there is any malafide intention or ulterior motive on the part of the assessee for not disclosing the same. Also, taking into account, detailed discussions on long line of judicial precedents referred by the ld. Counsel, we delete the penalty in all the five appeals under consideration before us. Accordingly, grounds taken by the Revenue in this respect are dismissed. 10. In the result, bot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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